Key Debt Recovery is a collection agency, not a law firm or an accounting firm, and nothing in this post is legal or tax advice. Talk to your accountant before writing off any debt, and to an attorney about any deadline that applies to your accounts.
December is when most businesses close the books, plan next year and find out how much of this year's revenue is still sitting in unpaid invoices. For many, it is a lot. Nearly 3 in 5 small businesses (59%) have invoices overdue by more than 30 days, and the average business with unpaid invoices is owed $17,700, according to the QuickBooks 2026 Small Business Late Payments Report.
An old invoice does not get easier to collect by waiting until January. A short review in November or early December gives every account a clear next step before the year ends.
Start With an Aging Report
Pull a list of every open invoice by age: current, 30, 60, 90 and over 120 days. Most accounting software produces it in a few clicks. For each account past 60 days, note three things: the last time you heard from the customer, whether they dispute anything, and whether they are still buying from you.
That list is the whole exercise. Every old invoice goes into one of three piles.
Pile 1: Keep Chasing It Yourself
These are customers who still answer, agree they owe the money and have given you a date. They are usually worth keeping as customers too.
Confirm the balance in writing and ask for a payment date before the holidays.
Offer a simple payment plan for larger balances, with dates and amounts in writing.
Hold new orders until older invoices are brought current, if your terms allow it.
Pile 2: Hand It to a Collection Agency
These are accounts where the conversation has stopped: missed promises, unanswered calls, or a dispute that only appeared once you asked for payment. Accounts over 90 days with no firm date usually belong here.
Moving these before year-end matters for two reasons. The longer a debt sits, the harder it is to find the right contact and the more likely the business has other creditors in line. And a collection agency can work the account through the holidays, while your team is busy.
If you are unsure whether to keep an account in-house, our guide to in-house collections vs. a collection agency walks through the trade-offs.
Pile 3: Review With Your Accountant
Some accounts are truly gone: the company closed, the owner disappeared or the amount is too small to pursue. Your accountant can tell you whether a write-off makes sense this year.
The IRS allows a deduction for a business bad debt when it becomes partly or totally worthless, in the year it becomes worthless, and you need to show you took reasonable steps to collect it. The amount also has to have been counted in your income first, so many businesses that report income only when they are paid cannot deduct unpaid invoices. That is a conversation for your accountant, before the year closes.
A record of your collection efforts, including any work by a collection agency, also helps support a write-off if you take one.
Set Up Next Year to Need Less Clean-Up
The best time to tighten payment terms is when you are looking at the cost of loose ones. Clear due dates, agreed late fees, a line on collection costs and a personal guarantee from the owner all make next year's unpaid invoices easier to recover. Our post on five lines to add to your payment terms covers each one.
Key Debt Recovery helps businesses recover past-due commercial accounts. If your year-end review turns up accounts for pile 2, submit an account or contact us to talk them through.